Magic cheese scam stinks up rural Chilean town

CANTAUCO, Chile (Reuters) – It was supposed to be a magic recipe for instant riches, but instead hundreds of residents in this sleepy town in central Chile are up in arms over a "magic cheese" scam that has left many deep in debt.

Chilean housewife Erica Pavez was one of around 300 residents taken in by the pyramid scheme, buying kits to make "magic cheese" said to be used in beauty products like luxury shampoo and moisturizers.

Lured by the scheme, Pavez and her family spent about 25 million pesos (27, 745 pounds)) on the kits, which they believed contained special ingredients to produce the "magic cheese" but in fact turned out to be boxes of crystallized bacteria worth around $4 each (2.7 pounds). The kits cost nearly $400 a piece.

"We are modest people here, casual workers and we got more and more into debt so that we could get into the business," she told Reuters as she prepared to file her claim with visiting French investigator and examining magistrate Sylvie Gagnard.

"I am very disappointed," she said in tiny Cantauco, 75 miles south of the capital Santiago. "We have nothing."

She produced the cheese at home following instructions to mix the ingredients with milk and ferment them for two weeks. The small, round cheeses she believed would be turned into expensive beauty products ended up on the scrap heap.

Frenchwoman Gilberte Van Erpe, arrested and placed under investigation in France last year, is suspected of setting up a vast pyramid scheme, telling buyers the fermented mass produced by the kits could be sold to cosmetics companies in France.

A French newspaper reported Van Erpe made about 30 million euros (26.25 million pounds) from her activities. She could face up to 10 years in prison if convicted.